Question

What does a point inside the production possibility frontier represent?

Short answer

Inefficient resource allocation is represented by a point inside the production possibility frontier.

Step-by-step solution

Introduction

PPF stands for Production Possibility Frontier. It's a graph that shows the most cost-effective combinations of two items that can be made with limited resources.

Explanation

The PPF curve (shown below) depicts several combinations (from P to T) of economic output and environmental protection that are both productively efficient but have differing balances of both variables. PPF has the point $\mathrm{M}$, which represents a combination of less than half of both variables. If the yield of variables is low, it suggests the variables are not being used efficiently or optimally. As a result, the resulting combination is inside the curve rather than on it. As a result, in terms of productivity,$\mathrm{M}$is inefficient.